Amazon has been the leader in the cloud space for years. Cloud
service providers like Amazon, Google, and Microsoft let other
companies save money on hardware by charging them to use their
servers, storage, and database resources.

Amazon launched AWS in 2006. Google has always focused on
building incredibly powerful data centers, but it didn't start
renting out computing power until two years later, in 2008. When
Google did finally unveil its services, the company required
customers to write software similar to the way that it does, and
the lack of flexibility pushed people towards working with
Amazon.

A former Amazon executive who now runs a cloud-management startup
called Nimbula told Barr that at a meeting with Google executives
in 2009 about potentially teaming up to compete against Amazon,
they seemed nonplussed.

"Their answer was 'Why,'" he says. "They weren't convinced that
this was a real business."

Amazon Web Services accounted for 37% of the $9
billion infrastructure as a service (IaaS) market in 2013,
according to Evercore, and Gartner reports that the market
will grow 35% a year to $42 billion by 2018.

Despite Amazon's huge lead, Google is determined to close the
gap.

In September, Google announced a program called Cloud Platform for Startups where it gave
fledgling companies $100,000 in cloud computing credits for
free, thereby enticing them into its ecosystem early. As the
startups grow, they'll likely stay with Google, which translates
to increased business. Last year, Google launched Compute Engine,
a flexible service similar to what Amazon offers.

At its Google Cloud Platform Live conference today, Google announced a series of price cuts, new
mobile features, upgrades to Compute Engine and App Engine,
partner integration with Google Cloud Platform and more. (Amazon
is hosting its own cloud services conference — AWS re:Invent — next week.)

This isn't the only place where Amazon and Google are battling.
They are both competing to win the same-day delivery battle. And
they are competing to win over users who are searching for things
to buy.

For years, Google was the starting point for anyone looking to
buy something on the internet. As Amazon has grown, it's become a
starting point for lucrative commercial searches. This is a real
threat to Google's business.

For all the focus on Apple versus Google, and Google versus
Microsoft, the real battle for Google is against Amazon. That's
why we're going to see Google attack another big, core Amazon
business line.

Disclosure: Jeff Bezos is an investor in Business Insider through his
personal investment company Bezos Expeditions.